US stocks close lower after jobs data as S&P 500 suffers longest losing streak since 2011

All three major US stock benchmarks closed lower on Friday, each posting another week of losses, as investors weighed April jobs data amid heightened stagflation fears. The S&P 500 fell for the fifth week in a row, its longest losing streak since June 2011, according to Dow Jones Market Data.

How did the stock indices perform?
  • Dow Jones Industrial Average DJIA
    it fell 98.60 points, or 0.3%, to close at 32,899.37.

  • The S&P 500SPX
    it fell 23.53 points, or 0.6%, to finish at 4,123.34.

  • The Nasdaq Composite COMP
    it lost 173.03 points, or 1.4%, to finish at 12,144.66.

On Thursday, the Dow Industrial fell 1,063.09 points, or 3.1%, its worst daily percentage drop since Oct. 28, 2020, according to Dow Jones Market Data. The S&P 500 fell 3.6%, while the Nasdaq Composite fell 5% in its worst daily percentage decline since June 11, 2020.

For the week, the Dow Jones and S&P 500 each fell 0.2%, while the tech-heavy Nasdaq Composite fell 1.5%. Both the Nasdaq and the S&P 500 fell for the fifth week in a row, while the Dow fell for the sixth week in a row, according to Dow Jones Market Data.

What drove the markets?

Major US stock benchmarks fell on Friday to post weekly losses, after posting big gains earlier in the week.

“It’s been a confusing and erratic market, to say the least, this week,” Keith Lerner, co-chief investment officer at Truist Advisory Services, said in a phone interview Friday. “We have a somewhat fickle market right now.”

Big gains in Wednesday’s relief rally, which was sparked by Federal Reserve Chairman Jerome Powell’s comments that the Fed was not actively considering a big 75 basis point interest rate hike, have been erased amid concerns the central bank might not be doing enough. to control inflation, according to Lerner. Investors are concerned that inflation will remain elevated, forcing the Fed to be more aggressive in a slowing economy, he said.

But Friday’s jobs report should “alleviate some concerns” that a recession is looming, according to Lerner, who said he doesn’t expect a recession in the next 12 months. Even if the economy is slowing, “at least we have some momentum,” he said.

The US economy added 428,000 new jobs in April, according to a report Friday from the US Bureau of Labor Statistics. But an acute labor shortage showed little improvement last month, which could underscore concerns about inflation that is already at its highest point in 40 years. Economists surveyed by The Wall Street Journal had forecast 400,000 new jobs.

The jobless rate was unchanged at 3.6%, the government said on Friday, just above a 54-year low. Average hourly earnings cooled, rising 0.3% in April versus expectations for a 0.4% rise.

The jobs report “has something for everyone … steady job gains that support economic growth with less wage pressure, possibly easing inflation fears,” said John Lynch, chief investment officer at Comerica Wealth Management.

“Investors need confidence that the Federal Reserve will not raise too aggressively and push the economy into recession in its fight against inflation. Today’s report is balanced and may prove to dampen the extreme volatility of the past few days,” he wrote.

During a discussion at the Carlson College School of Management on Friday, Minneapolis Fed President Neel Kashkari rejected the views of many hard-line commentators that the Fed is far behind in the battle to control inflation. Kashkari said the Fed’s forward guidance has managed to push long-term inflation-adjusted rates close to a neutral level.

In the opinion of Ryan Belanger, founder of Claro Advisors, the central bank is “delayed in terms of raising interest rates.” He said by phone on Friday that “a case can be made to rip the Band-Aid off and cool down this inflation.”

Major US stock indices ended the week with small losses, belying the volatile action seen in recent days.

Watch: Does the choppy stock market have you dizzy? Investors don’t see smooth sailing anytime soon

A sharp drop in first-quarter US productivity data and a rise in unit labor costs released on Thursday were also cited as factors in the market’s decline that day, underscoring fears of stagflation. That runs counter to the claim by Powell and other top Fed officials that they can achieve a so-called soft landing: reducing inflation without completely halting economic growth.

Read: Why did the Dow Jones plunge more than 1,000 points? Should I wait for the stock to go lower? This is what some professionals think.

“What is dangerous about yesterday’s huge market crash is that there must be an element of doubt about the ability of there to be an effective ‘Fed Put’ in this cycle after a 30 to 40 year period in which the bank center has almost always been able to come. to the market’s rescue,” said a team of Deutsche Bank strategists led by Jim Reid.

Read: Why the Stock Market Crash Was Partly Due to Bad Inflation News

The increased volatility is likely to persist as the market is “trying to figure out where interest rates are going to settle,” according to Claro’s Belanger.

Meanwhile, 10-year and 30-year Treasury yields held at levels last seen in 2018, reaching on Thursday as stocks tumbled. The 10-year yield BX:TMUBMUSD10Y
it rose 5.8 basis points on Friday to 3.124%, the highest level since Nov. 13, 2018 based on 3 p.m. ET levels, according to Dow Jones Market Data.

“Rising rates are putting pressure on stocks,” Truist’s Lerner said.

Read: ‘You don’t want to be caught off guard’: It’s ‘classification day’ and here’s what that means for US stocks

Which companies were in focus?
  • Zillow Group Inc. Z Stock
    it fell about 4.4% after the company beat revenue forecasts, but delivered a disappointing forecast on Thursday night that reflected the uncertainty facing the real estate sector.

  • Cloudfare Inc. NET Stock
    tumbled 15.7% after the cybersecurity firm’s quarterly results slightly beat Wall Street’s expectations, but its final forecast for the current quarter signaled a possible flaw in its next report.

  • DoorDash Inc. DASH
    Shares fell 1.4% after the delivery platform company beat revenue forecasts but posted a larger-than-expected decline.

  • World Wrestling Entertainment Inc. Stock WWE
    it fell 1.5% after reporting earnings and revenue that beat expectations.

  • Block Inc. SQ
    it fell short on earnings and revenue, but gave bullish signs about its Cash App business. Shares closed 0.7% higher.

How did other assets fare?
  • The ICE US Dollar Index, DXY
    a measure of the currency against a basket of six major rivals, fell 0.1%.

  • GC00 Gold Futures
    pink, with gold for delivery in June GCM22
    closing 0.4% higher at $1,882.80 per ounce. Still, the precious metal lost 1.5% for the week.

  • In Oil Futures, West Texas Intermediate Crude for June Delivery CLM22
    it rose 1.4% on Friday to settle at $109.77 a barrel. That brought his weekly gain to 4.9%.

  • Bitcoin BTCUSD
    it was down 1.3% at $35,960.

  • In European equities, the Stoxx Europe 600 XX:SXXP
    closed 1.9% lower for a weekly drop of 4.5%. FTSE 100 London United Kingdom:UKX
    it lost 1.5% on Friday and is down 2.1% this week.

  • In Asia, the Hang Seng HSI Index, -3.81% HK:HSI
    closed 3.8% lower on Friday and slid 5.2% for the week. The Shanghai Composite Index CN:SHCOMP
    fell 2.2% on Friday to post a weekly drop of 1.5%, while the Nikkei 225 index rose 0.7% on Friday for a weekly advance of 0.6%.

—Barbara Kollmeyer contributed to this report.

Add Comment